Demographic shock transmission from large to small countries

Abstract

International commodity and capital flows provide channels for the transmission of the effects of demographic changes in large countries onto small open economies by altering the prices and interest rates facing them. This implies that even small countries with relatively young populations are potentially vulnerable to the effects of population aging in large industrial economies. To address this issue, which has largely been overlooked in previous literature, this paper considers the case of European Union and Turkey and shows, within an overlapping generations general equilibrium framework, that spillovers of the demographic shock in Europe would intensify the changes that Turkey would experience during its own demographic transition.

Parametric pension reform with higher retirement ages: A computational investigation of alternatives for a pay-as-you-go-based pension system

“…The Turkish example is particularly interesting because the state pension system in Turkey already faces a severe "nancial crisis despite a relatively young population/workforce (Kenc and Sayan, 2000). Unlike other countries where similar pension systems face "nancial di$culties largely due to population aging, the crisis of the Turkish system stems from the retirement ages that are exceptionally low by international standards.…”

Contribution of Increased Life Expectancy to Economic Growth: Evidence From Cee Countries

“…In this respect, Europe's population dynamics make for a sensitive environment for the negative effects of ageing to manifest (Floden, 2003). Kenc, Sayan (2001) make the case for open economies experiencing spillover effects, making changes in real output caused by demographic trends difficult to isolate for neighbouring countries.…”

“…Merette, Georges (2010) also refer to globalisation reinforcing the spillover effect conceptualised by Kenc, Sayan (2001). Kinsella, Philips (2005) take note of changing behavioural patterns of retirees, exemplified by Cigno (1993) in the notion of intergenerational transfers and altruism: rather than spend all of the accumulated capital in retirement, retirees transfer a part of their wealth to their offspring and in doing so compensate the loss of productivity after entering retirement.…”

International Trade with Pensions and Demographic Shocks

“…Kenc and Sayan (2001) apply an OLG computable general-equilibrium model to analyse the effects of population ageing in the EU on Turkey's key macroeconomic variables with international trade as a transmission mechanism. They find that demographic developments in Europe magnify the economic effects of ageing in Turkey considerably.…”